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Legal: Bridging the gender pay gap

Keely Rushmore explains what firms must do to meet new requirements on reporting the gender pay gap, and how they can turn the new rules to reputational advantage

More than 40 years on from the introduction of the equal pay laws, statistics show that women still earn less than men, on average. Research from the Office for National Statistics (ONS) in 2016 revealed that, despite the national average gender pay gap sitting at 18.1%, the discrepancy was even greater in the construction industry with women being paid, on average, 23.3% less than men. No other industry had such a disparity.

There are, of course, some reasons to explain the difference at least partly. It appears that across the construction industry’s various sectors, the largest pay gap in favour of men is among the trade and labour roles, where men in supervisory positions received 45.4% more pay than women and those in operative roles received 15.3% more. The overall pay differential between men and women in professional positions is smaller, with female project managers receiving 3.2% less than their male counterparts, and female chartered surveyors receiving 0.9% less.

The reasons behind these figures may relate to the outdated stereotype that men are better suited to the construction industry (especially in the more labour-intensive roles) than their female counterparts. Indeed, in a survey commissioned by the RICS, 30% of women cited sexism as their reason for opting out of applying for senior positions, while 38% of men said they believed they as men were better suited to such roles than women.

Mandatory reporting

In a bid to tackle the issue of the gender pay gap, in 2017 the government introduced a mandatory annual gender pay gap reporting mechanism for businesses employing at least 250 employees. The data that firms are now required to publish is far-reaching, and includes:

the difference in mean and median hourly pay between men and women

the difference in mean and median bonus pay

the proportion of male workers and of female workers receiving bonuses

the proportion of male workers and of female workers falling within each of the four quartile pay bands.

Employers may also publish a narrative alongside their figures and outline the steps they intend to take in to close the gender pay gap within their organisation.

The figures will capture the situation at a particular snapshot date – 5 April of each year – and companies need to publish them by 4 April the following year (4 April 2018 is therefore the first deadline). The process must be repeated annually, with figures remaining available online for three years.

Although it is not compulsory to provide an explanatory narrative, we would strongly encourage employers to do so, as the data alone is unlikely to tell the whole story. Indeed, the ONS survey revealed that in the construction industry the difference in pay between men and women was most likely to be attributable to the fact that more female engineers work part-time; their hourly rates may be the same as (or similar to) their male counterparts but their annual earnings are consequently less.

Alternatively, commentary can help highlight an organisation’s strong performance relative to its competitors; those organisations whose figures are positive will be in the minority and will no doubt want to advertise this fact.

One criticism of the reporting regulations is that there is no official enforcement system for non-compliance, which in turn has led to criticisms of the likely effectiveness of the scheme. However, the Equalities and Human Rights Commission has indicated that it will be consulting on penalties and has warned that, in the worst cases, this could include formal investigations, court hearings and significant fines as well as reputational damage. It would therefore be wise to take the issue seriously.

What should firms do now?

If organisations have not already done so, they should check whether they fall within the provisions of the regulations and ensure they have systems in place to capture the relevant data efficiently and in good time.

It is also worthwhile carefully considering the content of the accompanying narrative well in advance of publication. Finally, consider investing in schemes and training that support and encourage women to hold more senior roles within the organisation.

Gender pay gap reporting is certainly a step up the ladder in terms of tackling the disparity between men’s and women’s pay. Notably, it has been reported that 84% of women aged 16-30 would consider an organisation’s gender pay gap, and 80% would compare it with other organisations when considering new employment.

While the regulations raised some concerns on how reporting might affect business reputation, recruitment and retention, by choosing to engage in the process, organisations can significantly reduce their risk of losing out on new business and also – importantly – ensure they are not missing out on talent.

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